Electricity Levy Schemes (North of Scotland)

– in the Scottish Parliament on 12th January 2022.

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Photo of Alasdair Allan Alasdair Allan Scottish National Party

7. To ask the Scottish Government what work is being undertaken to change electricity levy schemes to tackle fuel poverty in rural and island areas of the north of Scotland. (S6O-00606)

Photo of Michael Matheson Michael Matheson Scottish National Party

The legal powers to regulate energy markets and set associated levies are reserved to the United Kingdom Government, and we have called on the Government to take action to protect energy consumers against the significant increases that are expected in retail prices in the coming months.

We must see a review of the energy levies for social and environmental obligations, as set out in our strategies on heat in buildings and fuel poverty. That is a key ask that the Scottish Government has made of the UK Government through our own representations. I encourage anyone who is facing high energy bills to contact Home Energy Scotland for advice on how to reduce their fuel costs.

Photo of Alasdair Allan Alasdair Allan Scottish National Party

I thank the cabinet secretary for that reply. The north of Scotland region is rich in green energy but has twice the average Scottish level of extreme fuel poverty. As the cabinet secretary has recognised, part of that problem is the unfair and archaic transmission charges, which are set by the UK Government and, in effect, charge consumers by how far they are from the south. In Scotland, there is a significantly higher distribution cost levy per unit for customers in the north than in the south. Will the Scottish Government continue to lobby to get rid of that once and for all?

Photo of Michael Matheson Michael Matheson Scottish National Party

Dr Allan makes a very good point, and he represents a constituency with greater levels of fuel poverty. That is exacerbated by some of the environmental and social obligation costs that are applied to energy bills and end up causing a premium to be set for some customers who make greater use of electricity-based heating. The Scottish Government will continue to make representations on the matter to the UK Government, which needs to take urgent action to address the issue, because a failure to do so will simply cause more households to fall into fuel poverty. It is essential that the UK Government takes that urgent action before the review of the fuel price cap is completed and implemented in the months ahead.

Photo of Liam Kerr Liam Kerr Conservative

The cabinet secretary is very quick to blame the UK Government but fails to mention that, by removing subsidy for liquefied petroleum gas—LPG—heating systems, through its warmer homes Scotland scheme, the Scottish Government is forcing electric-only heating solutions on fuel-poor, off-grid households, when they might not be appropriate or what the consumer needs. Will the cabinet secretary consider reinstating support for heating technologies such as LPG, which have a clear transition to renewable bio LPG, in order to give fuel-poor households meaningful choice?

Photo of Michael Matheson Michael Matheson Scottish National Party

The way to address that particular issue is to reduce the cost of electricity, by dealing with the unnecessary levies on electricity costs that are imposed by the UK Government through the

Office of Gas and Electricity Markets, rather than continuing to sustain forms of energy technology that are not compatible with our net zero objectives. That requires a significant change in the way that energy is provided in this country. To simply tinker with the issue—in the way that Liam Kerr suggests—will not significantly address fuel poverty, because the regulation of the present market is not working effectively or in consumers’ interests.

The UK Government needs to get serious about the matter and take action before households find their energy costs increasing by almost 50 per cent in the course of the next few months, should the fuel price cap be lifted to the expected levels. It is essential that the UK Government steps in and deals with the issues. If it does not do so, its inaction and failure to properly regulate the energy markets will potentially send millions of households into fuel poverty.